MexECON Blog

April PMI Rises to 52.8

Mexico's April purchasing managers index (PMI) for the manufacturing sector rose to a seasonally-adjusted 52.8, after revised readings of 52.4 in March and 52.3 in February.  The rise in April brought the index to its highest level since March 2013.  According to the report, the rise in April came from increases in three of the five subindexes.  The subindex on production rose smartly to 54.8, while the subindex on inventories jumped to a near-record 54.0.  The subindex on employment jumped to a 13-month high of 52.3.  In contrast, the heavily-weighted subindex on new orders decreased in April, though it remained high at 54.5.  The subindex on supplier deliveries slumped to 46.2.

The report was released today by Banco de México and the official statistics agency INEGI.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  At its current level, the index suggests Mexico's factory sector is growing broadly again after a weak spot in mid-2013.  That may reflect a very modest improvement in exports in recent months.  The apparent rebound in U.S. demand this spring could already be having an impact.  Nevertheless, domestic demand in Mexico remains weak on balance.  If the rise in the April subindex on manufacturing reflects an improvement in the labor market, Mexican retail demand could improve in the coming months.  However, other aspects of domestic demand remain in the doldrums, and that could limit the rebound in the factory sector.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1404

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